Work Opportunity Tax Credit

WHAT IS THE WORK OPPORTUNITY TAX CREDIT (WOTC)?

The WOTC is one tool in a diverse toolbox of flexible strategies designed to help move people from welfare into gainful employment and obtain on-the-job experience.  It joins other tax credits, education, and workforce training programs that help American workers with barriers to employment prepare for good jobs; ease their transition from job to job; benefit from the creation of effective regional economic development strategies; and create high performance workplaces.

WHAT’S NEW:  The changes introduced by P.L. 109-432- apply retroactively to individuals who began to work for an employer after December 31, 2005.  They are as follows:

            the earnings test for ex-felons was eliminated;

            the maximum age for food stamp recipients was increased;

            the certification request filing deadline was increased;

           the welfare-to-work provisions were merged into the WOTC

     The consolidated WOTC for hiring most target group members can now be as much as;

           $2,400 for each new adult hire;

           $1,200 for each new summer youth hire,

           $4,800 for each new disabled veteran hire, and

           $9,000 for each new long-term family assistance recipient hired over a two-year period.

     WHAT NEW HIRES CAN QUALIFY EMPLOYERS FOR THE WOTC?

     The new employee must belong to one of the following nine WOTC target group:

           Long-term TANF Recipient.

           Other TANF Recipient.

           Qualified Food Stamp Recipient.

           Designated Community Resident.

           Summer Youth Employee.

           Qualified Veteran

           Vocational Rehabilitation Referral

      Qualified Ex-Felons.  An individual who has been convicted of an felony and has a hiring date which is not more than one year after the last date on which he was so convicted or released from prison;

           SSI Recipient

      For more information visit IRS Form 8850, the Work Opportunity Tax Credit Pre-Screening Notice and Certification Request, and its instructions, or download from http://www.irs.gov.

         

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